UNITED STATES SECURITIES AND EXCHANGE
Litigation Release No. 15267 / February 27, 1997
SEC v. Marshall E. Melton; Asset Management and Research, Inc.;
Westview Capital, L.C.; Trading Partners, L.C.; and Trading
Partners II, L.C. (M.D.N.C., Civil Action No. 2:97-CV-00151)
The Securities and Exchange Commission announced today that
a complaint was filed by the Commission on February 24, 1997, in
the United States District Court for the Middle District of North
Carolina, Greensboro Division, against Marshall E. Melton
("Melton"); Asset Management and Research, Inc. ("AMR"), a
registered investment advisor owned by Melton; and three limited
liability companies controlled by Melton. The three limited
liability companies are Westview Capital, L.C. ("Westview
Capital"); Trading Partners, L.C. ("TP"); and Trading Partners
II, L.C. ("TP2").
The complaint seeks preliminary and permanent injunctions to
enjoin defendants Melton, AMR, Westview Capital, TP and TP2 from
violating Sections 17(a)(1) through 17(a)(3) of the Securities
Act of 1933 and Section 10(b) of the Securities Exchange Act of
1934 and Rule 10b-5 thereunder. Further, the complaint seeks to
restrain defendants Melton and AMR from violating Section 206 of
the Investment Advisers Act of 1940 and to enjoin Westview
Capital from violations of Section 15(a) of the Securities
Exchange Act of 1934. The Commission also seeks disgorgement of
all ill-gotten gains, prejudgement interest thereon, civil
penalties, a freeze of all assets held by the Melton and the
defendant companies, and the appointment of a receiver for
Westview Capital, TP and TP2.
The complaint alleges that violations of the antifraud
provisions of the securities laws by Melton and the defendant
companies occurred primarily from mid-1994 through late 1996.
Defendants Westview Capital, TP and TP2, through private
placements conducted by Melton, raised approximately $5,000,000
from approximately 44 investors, many of whom invested in more
than one of the entities. Through misrepresentations and the
omission of material facts, Melton solicited and raised funds
from unwitting investors. The investors were advised that their
funds were being invested in specific investments, when, in fact,
Melton was consistently commingling monies among the limited
liability companies and using the investors' funds to operate
other entities owned by Melton.
The Commission's complaint further alleges that Westview
Capital acted as an unregistered broker by receiving commissions
on sales of units in TP and TP2, which were organized as pools to
trade in securities. TP and TP2 deceived their investors by
making distributions of "profits" when, in fact, any trading
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returns were dwarfed by the losses that TP and TP2 carried in
their trading accounts.